Build-A-Bear surges 14% on alternatives evaluation

CarolynPritchard

SAN FRANCISCO (MarketWatch) -- Shares of Build-A-Bear Workshop Inc. closed with a more than 14% gain Thursday after the company said it has hired Lehman Brothers to explore strategic alternatives aimed at enhancing long-term shareholder value.

Build-A-Bear
BBW, -3.02%
shares rose $3.19 to end the session at $25.70.

The decision prompted Susquehanna Financial analyst Thomas Filandro to upgrade shares of Build-A-Bear to positive from neutral. "We firmly believe Build-A-Bear is a prime candidate for a private equity leveraged buyout," Filandro wrote in a research note.

Citing recent deals, he put the buyout valuation range at between $34 and $36.

The company, whose retail locations allow customers to make customized stuffed animals, said that while the evaluation process is under way, it will neither provide new earnings guidance nor comment further on the guidance it has already provided.

Build-A-Bear last week lowered its second-quarter per-share profit outlook to a range of 7 cents to 10 cents from a prior forecast of 15 cents to 19 cents. It attributed the revised outlook to a poorer-than-expected showing in sales at stores open at least a year in North America, which it put at negative 7% to 9%.

St. Louis-based Build-A-Bear said it still plans to increase the number of its stores in North America to at least 350 and in Europe, to 120, and to increase the number of its international franchising operations to roughly 300 stores.

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